Inflation once again!

Euro_Kraut

CPI rises 0.4% in August

Take that deflation!

Okay, I'm being deliberately over optimistic. Still given the recent unemployment figures and this rise (which may indicate slightly higher consumer spending) are their tentative signs that we are approaching a the bottom of the recession? This comes after some positive data on house prices from the UK and better than expected economic data from Germany

What are people opinions on this, false dawn or green shoots?

zootroid

I wouldn't read too much into the figure. I'd expect there to be negative inflation again for September. Unemployment is still sneaking up, so there'll be less money to spend.

erictheviking

I think that is probably due to petrol prices creeping up:(

dvpower

Do you think its too early to ask for a pay rise?;)

SLUSK

Euro_Kraut wrote: »

CPI rises 0.4% in August

Take that deflation!

Okay, I'm being deliberately over optimistic. Still given the recent unemployment figures and this rise (which may indicate slightly higher consumer spending) are their tentative signs that we are approaching a the bottom of the recession? This comes after some positive data on house prices from the UK and better than expected economic data from Germany

What are people opinions on this, false dawn or green shoots?

Do you think that erosion of purchasing power is a good thing?

sneakyST

Euro_Kraut wrote: »

CPI rises 0.4% in August

Take that deflation!

This comes after some positive data on house prices from the UK
What are people opinions on this, false dawn or green shoots?

How is rising house prices positive? More debt isnt a good thing. Dont believe all you read in the mainstream media. House prices are still down yoy over here and contrary to what the media is saying , estate agents windows show "reduced prices" & "new instruction". There is nothing happening at the lower end of the market. The next 6 months is going to be intresting and 40% falls are expected, plus banks arent lending.

Euro_Kraut

SLUSK wrote: »

Do you think that erosion of purchasing power is a good thing?

Yes I think its absolutely wonderful. :rolleyes:

You may need to read my post again. It was a discussion starter rather than me offering my opinion. (I mainly started it as I needed an excuse for use the clever thread title)

Having said that; deflation is not a good thing to have in an economy and a return to low, but positive inflation is welcome in my view. I would be interested to hear other take on recent economic data, both domestic and foreign. There is a view abound that the much mooted green shots are popping up. I am not entirely convinced yet.

Euro_Kraut

sneakyST wrote: »

How is rising house prices positive?

It indicates renewed activity in the housing market. It doesn't necessarily equate to more debt as you suggest.


It indicates renewed activity in the housing market brought about by a relaxing of credit restrictions that have characterised the past 12 months.

Of course the figures only apply to the UK. I'm not sure why you are bringing the Irish housing market into this? That clearly has a long way to go and I would agree with your analysis of that.

However, if we were to grasp at straws we could grasp at this one: The housing market is systemic to the UK economy. Positive signs in that sector can feed into other sectors. The UK is a significant trading partner of Ireland. Ergo Irish exports should increase.

mike65

Inflation? negative deflation shirley?

sneakyST

Euro_Kraut wrote: »

I'm not sure why you are bringing the Irish housing market into this? That clearly has a long way to go and I would agree with your analysis of that.

Sorry for the confusion EK......"here" meant the UK.....

Dannyboy83

Nearly everyone who isn't in Fianna Fail seems to be agreeing that property is going to drop by at least 25% in the next 12 months, and maybe as much as 50% in the next 2 years.

You would think this is good news, but to be honest, a lot of friends are talking about emigrating as they don't see any future here.

Senna

Dannyboy83 wrote: »

Nearly everyone who isn't in Fianna Fail seems to be agreeing that property is going to drop by at least 25% in the next 12 months, and maybe as much as 50% in the next 2 years.

You would think this is good news, but to be honest, a lot of friends are talking about emigrating as they don't see any future here.

But those two things aren't related are they? house prices dropping isn't causing emigration among your friends?

Continued house price drops are only a good thing, if the market settles at about 60+% of peak it might cause short term heartache for some, but will only benefit the country.
(i might/will be in NE then, but i'm looking at the bigger picture)


edit, were still in Deflation and a long enough way from Inflation, were just deflating slower

Dannyboy83

Senna wrote: »

But those two things aren't related are they? house prices dropping isn't causing emigration among your friends?

Continued house price drops are only a good thing, if the market settles at about 60+% of peak it might cause short term heartache for some, but will only benefit the country.
(i might/will be in NE then, but i'm looking at the bigger picture)


edit, were still in Deflation and a long enough way from Inflation, were just deflating slower

Yes, you're right certainly.
Property corrections are what are keeping me here at the moment.
I have transferable skills and could have already emigrated, but if property will correct itself, I will stay and buy a house.

My point was that friends are emigrating in spite of the property correction. We are facing into a long slog of very high taxation, without the amenities and services it should provide. Then there is the prospect of paying for your children's college fees etc.
We are unearthing new scandals from day to day, be it Fas or Golden Circles or Ceann Comhairles, yet no reform or accountability.
It seems this country's future is dwindling rapidly.

I suppose Fianna Fail are preparing for the forthcoming brain drain - hence the reintroduction of third level fees etc., adding fuel to the fire.

SLUSK

Euro_Kraut wrote: »

Yes I think its absolutely wonderful. :rolleyes:

You may need to read my post again. It was a discussion starter rather than me offering my opinion. (I mainly started it as I needed an excuse for use the clever thread title)

Having said that; deflation is not a good thing to have in an economy and a return to low, but positive inflation is welcome in my view. I would be interested to hear other take on recent economic data, both domestic and foreign. There is a view abound that the much mooted green shots are popping up. I am not entirely convinced yet.

You are saying that a little bit of erosion of purchasing power is a good thing? Why is deflation bad? How can it be a bad thing to get more purchasing power.

The only losers in deflation are suckers who borrow money, well I have no debts.

mike65

Deflation is bad cos it creats bad market psychology, who is willing to spend if the asset is going to be worth less in 6 months or a year? That also applies to hum drum stuff too, buy a fridge now? No I'll wait until the closing down sale of Fridge U Like.

SLUSK

That is just ridicolous, electronics has been getting cheaper for decades, yet people don't stop buying electronics. And perhaps lower consumption is a good thing to get rid of all the debts?

mike65

You're missing the point, people are being careful with thier cash as it is, deflation tends to mean its held onto even longer which dries up the cashflow of those who sell goods/services who then, in an effort to generate business, sell at a loss or just go bust as they run out of credit (the banks are not extending credit lines as you may have seen).

When times are good folks don't mind if thier Sonio Bravia will be worth nothing in three years (or indeed by the time they get it home and hung on the wall) as they will just go out and "upgrade" using cheap credit. Who is upgrading anything much these days?

Debt free is indeed a good place to be, however from a market point of view it stinks.

gurramok

Ireland needs temporary deflation due to the country being horrendously overpriced in most good and services.

The thing is to watch out for when deflation becomes a neverending spiral like Japan, thats the real danger.

SLUSK

So if inflation is good then hyperinflation must be great

mike65

Inflation is like Goldilocks porridge

SLUSK

Can you explain to me why it is great getting poorer? Please I am not able to understand the way you think.

mike65

If you had deflation you would get poorer not richer, why? Deflation would indicate no-one is buying stuff, people buying stuff be it a car or captial machinery to make a widgit is what keeps the world turning. Its why people have jobs and can go to the bank for credit to buy cars and houses. Deflation is the symptom first and foremost, but it can become embedded and thus turns into a disease.

Deflation spiral = no job = no money.

SLUSK

So by your logic everyone should get their own printing press, endless credit, endless boom!

What you forget with inflation is that since it decreases your purchasing power you will be able to by less stuff in the future, so that would get the same result anyways with job losses and stuff.

mike65

Thats where the Goldilocks analogy comes in, a little is okay. You get a hike in your wage packet every year.

Bad inflation is what everyone suffered through in the 70s on the back of oil price surges and energy crisis.

SLUSK

The Austrians seem to disagree about your views on a little bit of inflation being a good thing.

SkepticOne

For years we had inflation ahead of other Eurozone countries, but at the price of competitiveness. Now we have to pay that back. Part of the discipline of being in a currency union, unpleasant though it is.